The impact of capital budgeting techniques on the financial performance of courier companies in Kenya
The Study aimed at establishing the capital budgeting techniques and how those techniques impact to the financial performance of courier companies in Kenya. The questionnaires in the study were distributed in 30 different courier companies in Kenya whereby only one was a state owned company i.e. Postal Corporation of Kenya while the others were privately owned by locals and foreign investors. The research adopted a causal research design that is experimental and explores the effect of one , thing on another and more specifically, the effect of one variable on another. It's used to measure . what impact a specific change will have on existing norms and allows market researchers to predict hypothetical scenarios upon which a company can base its business plan. Several capital budgeting techniques were evaluated for their relationship with the finn's financial performance i.e. Return on assets and findings showed that Profitability index was highly related to the measure compared to other techniques. Methods used to assess risk analysis in capital budgeting were also evaluated e.g. scenario analysis, sensitivity, decision tree and simulation and findings indicated that scenario analysis was used more often by managers in assessing the risk analysis. Managers also preferred using cost of equity in determining minimum rate of return for evaluating appropriate projects that the cost of debts or weighted average cost of capital. Difficulties faced in capital budgeting process were analyzed in the study and adjusting for the inflation was shown to be the most difficulty of them all. There was a significant relationship between the capital budgeting techniques and the financial performance of courier companies and therefore the project concurred with previous findings and studies.